Sale of FCL Building remains up in the air

By GEOFF SENESCALL

Fletcher Building is canvassing shareholder sentiment in what is the clearest signal yet that the sales process might be on shaky grounds.

Because of the disparate nature of Building's asset base it is widely seen by the investment community as the most difficult of the three Fletcher Challenge assets to sell. Certainly, the Building share price has been languishing in recent weeks, indicating there is little faith in any sale occurring.

But as the process draws to a close the company has taken the curious step of sending out letters, dated August 9, to selected shareholders, informing them that a market research company has been commissioned to survey their opinions of Fletcher Building.

Brokers have viewed this as a softening-up exercise for the likelihood that Building will ultimately be spun off as a separately listed asset once Fletcher Challenge is dismantled.

The company, however, is playing down the importance of the "strictly confidential" shareholder survey.

But its timing comes as final bids are thought to have already been placed and the Fletcher Challenge board is close to making a decision. The speculation is that the Fletcher board will meet later this week or early next week to deliberate on the future of its three remaining assets, the others being the Energy and Forest divisions.

Fletcher Building chief executive Terry McFadgen said that nothing should be read into the survey. Its timing was coincidental, he said.

"It is just standard research that UMR Insight were doing for us as part of a look at the general Fletcher Challenge Building brand, which we kicked off a couple of months ago."

But he did say that one of the aims of the research was to look at the company going forward. "One possibility obviously for the company is that it will be spun out as a standalone entity. The others involve various sale options and this research is just being done as background to one of those options."

Asked about the survey's timing, Mr McFadgen said if there had been an irrevocable decision to sell the company it would appear that something was up.

"But the board has always made it clear that all options are being held open until a final decision has been made and no final decision has been made yet."

Several brokers have speculated about potential buyers for Fletcher Building. A broker research report said a sale to multiple buyers was an obvious solution, although difficult to achieve.

Possible buyers of the concrete and plasterboard assets include companies such as CSR, Blue Circle, Hanson, Boral, James Hardie and RMC. Those interested in steel might include BHP's Onesteel and Smorgon Steel.